Yahoo Finance’s Dan Howley joins Akiko Fujita to discuss how Microsoft is buying Bethesda Studios for $7.5 billion to boost Xbox.
AKIKO FUJITA: Let's take a look at where Microsoft shares are trading today-- down just slightly when you consider the broader market selloff. Microsoft today doubling down on the gaming space, acquiring ZeniMax Media. This is the company behind video game publisher Bethesda. We're talking about a $7 and 1/2 billion, all-cash deal, the largest gaming acquisition for Microsoft in its company history.
Let's bring in Dan Howley for the very latest on this front. And Dan, what does this mean in terms of Microsoft's broader gaming ecosystem?
DAN HOWLEY: Yeah, this is a massive, massive deal. When you look at game studios, they're never really published-- purchase for billions of dollars. And $7.5 billion for ZeniMax, which owns Bethesda, its software, Arkane Studios, eight different publishing-- developing studios, this is massive for Microsoft.
And there's really kind of two ways to look at this. One, it's kind of a way to strike at Sony, which it's going head to head with next-- in November on new consoles. There's Microsoft's Xbox Series S and Series X and Sony's Playstation 5 and then the digital version of Playstation 5. And then Microsoft's Game Pass service.
So really, what this does is it sets up Microsoft to be an even greater player in the gaming space. In the previous generation with the Xbox One, they lost out to Sony as far as sales go. We're talking about a 2-to-1 loss. There was 110 million Playstation 4s sold to just 50 million Xbox Ones sold. So that's telling you how big of a gap there is between Microsoft and Sony.
And that speaks to the fact that people weren't interested in what Microsoft had to offer because the pricing for those consoles this year, the Xbox One, was so high. But now, with this current generation, they're coming out with a new console that's $299. That undercut Sony's entry level console by $100 and sets up Microsoft for a really good rebound.
Now, with this Bethesda deal, what it does is it brings those huge studios underneath the Microsoft umbrella. So it can continue to sell those and allow those games to appear on rival consoles from Sony, from Nintendo, and still reap the rewards of that. And that's really going to really expand what Microsoft is capable of doing in the game space.
And then just that last piece, that Microsoft Game Pass, that's where people can subscribe for $10 a month or $15 month to get games a la carte. There's more than 100 games that are available. And you can download them and just play them for as long as you want. Delete them. Get a new one-- things along those lines. They're also teaming that up with their xCloud game streaming service.
So really, Microsoft is building out this huge ecosystem for gaming. And Sony just isn't responding in kind. In fact, they do have something similar to Microsoft's game. Pass. But it's not nearly as robust. And the pricing isn't where people want it to be. I think Microsoft, with this deal, is making itself out to be a huge, huge juggernaut for the coming generation.
AKIKO FUJITA: The gaming war is heating up. It's going to be interesting to see what Microsoft does with this acquisition. Thanks so much for that, Dan.